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Blockchain and Title Insurance

Tuesday, February 21, 2017  
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Blockchain and Title Insurance

Most everyone has heard of bitcoin, the cryptocurrency and digital payment system released in 2009, but what many don’t realize is that bitcoin is driven by what’s called “blockchain” technology. Major financial institutions are exploring the use of the technology, which can be thought of as a transaction or supply chain history, to handle their infrastructure in a secure and less costly manner – leaving open the question of how such moves will ultimately impact title companies.

More specifically, blockchain is a distributed ledger technology that amounts to a decentralized ledger that can be used to automate steps in a transaction. The technology can document the transfers of assets and record ownership of assets by using sophisticated algorithms. Currently, financial institutions are examining the potential for blockchain in trade execution, trading and registering assets, and tracking the movement of goods and currency.

According to David Treat, managing director at Accenture, which provides strategy, consulting, digital, and technology services, blockchain is “a technology which enables people to confidently and securely share access to data because they are able to prove to themselves mathematically that it hasn’t been tampered with”.

In the context of real property, a report by the law firm of White & Case, entitled: Beyond Bitcoin: The blockchain revolution in financial services, suggests that blockchain “eliminates the need for title insurance to confirm the accuracy of a local government’s registry. Instead…blockchain can be used to create an accessible ledger of property ownership, dramatically reducing the time it takes to transfer real estate ownership…” Companies such as Ubitquity, LLC, and Factom are reportedly building platforms designed to track property ownership.

Spending on blockchain technology is growing rapidly. Private blockchains allow transactions to be verified and tracked in a private network. Private blockchain participants can use the blockchain ledger among themselves. Basically, every participant has access to the secure ledger in which each new transaction is verified and added to the block. Everyone’s ledger is updated simultaneously.

The implications of blockchain’s adoption within the financial industry are far-reaching. How the title industry fits into this technology moving forward is a critical question that remains to be answered.

California Land Title Association

1215 K Street #1816 Sacramento, CA 95814-3905
Email:  |  Phone: 916-444-2647  |   Fax: 916-444-2851